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In a decision that could surpass the collusion rulings against Major League Baseball in terms of its importance to professional sports, and have a significant impact on the NFL’s ongoing labor dispute, U.S. District Judge David Doty has ruled in favor of football’s player’s union, the NFLPA, regarding claims that the league negotiated television contract extensions that were designed as “lockout insurance” as opposed to growing total revenues – revenues that determine the salary cap for the league (read the entire filing by the NFLPA). Those extensions were designed to pay owners over $4 billion in rights fees, even if games were not played. The league had claimed that those provisions were within the agreements before the extensions were released.

The record shows that the NFL undertook contract renegotiations to advance its own interests and harm the interests of the players. The NFL argues that the SSA 4 does not require it to act in good faith in 2011 or subsequent seasons, that lockouts are recognized bargaining tools and that it is entitled to maximize its post-SSA leverage. The court agrees.

However, under the terms of the SSA, the NFL is not entitled to obtain leverage by renegotiating shared revenue contracts, during the SSA, to generate post-SSA leverage and revenue to advance its own interests and harm the interests of the Players. Here, the NFL renegotiated the broadcast contracts to benefit its exclusive interest at the expense of, and contrary to, the joint interests of the NFL and the Players. This conduct constitutes “a design … to seek an unconscionable advantage” and is inconsistent with good faith. See Ashokan Water Servs., 807 N.Y.S.2d at 554 (citation and internal quotation marks omitted).

Doty said, it is hereby ordered that:

1. The court adopts the special master’s “recommendations for relief” paragraphs 1 and 2, see Op. 47, as there is no objection to these findings and recommendations before the court;

2. The court overrules the special master’s findings as to the NFL’s breach of the SSA relating to its contracts with DirecTV, CBS, FOX, NBC, and ESPN, and holds that the NFL breached the SSA as to those contracts; and

3. The court orders that a hearing be held concerning relief to be granted to the Players arising from the NFL’s breach of the SSA. The hearing shall consider the award of both money damages and equitable relief, including injunction. District of Minnesota Local Rule 7.1(b)

The NFLPA said in a statement, “This ruling means there is irrefutable evidence that owners had a premeditated plan to lockout players and fans for more than two years. The players want to play football. That is the only goal we are focused on.”

The NFL, through spokesman Greg Aiello said, “As we have frequently said, our clubs are prepared for any contingency, this decision included. Today’s ruling will have no effect on our efforts to negotiate a new, balanced labor agreement.”

The ruling by Judge Doty overturns Special Master Stephen Burbank’s ruling on the case that sided with the owners saying that they did not use best efforts to grow revenues “in good faith” but rather were using “sound business judgment” in negotiating the extensions during a poor economy.

However, in an NFLPA filing, redacted images of a Powerpoint presentation to NFL owners showed several slides in which negotiating favorable “pay for no play” provisions would act as “lockout insurance”. Commissioner Goodell also outlined reasons for wanting the provisions within sworn testimony.

A television ad produced by the NFL Players Association that would have run the day before the Super Bowl has been rejected by CBS. The ad, “Let Us Play,” focuses on the possible lockout of the players by the league when the current labor agreement expires March 3. The sides have been locked in a bitter war of words over owners looking to get an additional 18 percent cut of revenues that determine how much money goes to the players in the form of salaries. CBS is a network broadcast partner of the NFL, to which ‘The Eye’ pays $620 million annually to air games.

“I tried to have my team contact CBS to try to understand exactly what happened, but apparently they said they didn’t want to get involved with the labor negotiations,” said George Atallah, the Assistant Executive Director of External Affairs for the NFL Players Association.

The ad, seen below, depicts fans saying, “Let them play” interspersed with NFL players, and stark imagery of empty stadiums and was produced by New Media Strategies. The ad was to run on Feb. 5 during the NFLPA All-Star Game on CBS College Sports Network. The NFLPA reports that as part of the broadcast deal for the game on CBS College Sports Network they were granted 2 minutes of advertisement time. It is unclear what content, if any, the NFLPA will now run or if CBS would be in breach of their agreement based upon non-specific rejection due to their cozy agreement with the NFL

“The NFL knew nothing of CBS’ decision [to pull the ad], and had nothing to do with it,” said Greg Aiello the NFL’s Senior VP of Public Relations. “We have no objection to anyone running the ad.”

In terms of the NFLPA running an ad during the Super Bowl, Atallah said via Twitter, “We are not spending $3 million on an ad in the face of a lockout.”

The NFLPA has called a 3:15 PM CT press conference on Thursday just before Super Bowl XLV that will be played between the Pittsburgh Steelers and Green Bay Packers this Sunday. The NFL will hold its own press conference to address labor issues on Friday.

In the labor battle between the NFL and the the NFL Players Association, the drum that gets banged the most by the players union is, “Show us your books.” Commissioner Goodell said in a January letter to fans, “Yes, NFL players deserve to be paid well. Unfortunately, economic realities are forcing everyone to make tough choices and the NFL is no different.”

As mentioned, the NFL has basically told the NFLPA that seeking financial info to back their assertion that they are in need of “tough choices” is none of their business.

Since running Numbers Show NFL’s ‘Economic Realities’ for Lockout Unwarranted on Forbes last week, I have contacted the NFL several times to seek their side of the story. To date, they have not responded to any requests for comment. But, that doesn’t mean that there aren’t numbers out there to see whether the NFL is hurting in terms of revenues, club values, and profit. We need only look at Forbes’ franchise valuations.

Using the Forbes data from 2004 to 2009 – the last year Forbes ran their values – what gets painted is a case of haves and have-nots within the ownership ranks. And what that shows is instead of asking the players to take a pay cut, what is really needed is increased revenue-sharing.

Are profits leveling off in the NFL?

As pointed out in the “Economic Realities” article, the league has pointed to the only financial info made available to the public, the Green Bay Packers. The club pulled in $9.8 million in profits for the fiscal year that ended March 31 of last year. That was a decrease from $20.1 million from the year prior. The Forbes numbers use Operating Income as a measure of profit in their valuations each year. It is not a perfect measure of profit as it shows earnings before interest, taxes, depreciation and amortization (EBITA). Indeed, Operating Income grew by 3 percent from 2008 to 2009 after showing a 31 percent gain from 2007 to 2008. But here’s the rub: from 2006, the year the current CBA was reached, Operating Income in the NFL has grown 88 percent ($568.4 million to $1.069 billion). What’s interesting is that from 2004, two years before the current CBA was reached, to 2009, Operating Income in the NFL has grown by just 3 percent. The chart below shows total Operating Income (a form of profit) for the NFL from 2004 to 2009 based on the Forbes numbers:

On Wednesday, Bob Batterman, the outside labor counsel for the NFL said to the Washington Post that the NFLPA was, more or less, hoping for a lockout by the owners when the current CBA expires on March 3.

“If you want to litigate, if you want to get Congress involved, you want a lockout to occur and you want the clock to run out [on negotiations] so your decertification and litigation strategy can come into play,” Batterman said in a telephone interview.

“This is not a union eager to avoid a lockout. This is a union waiting for a lockout to occur.”

That claim angered representatives from the NFLPA; they arranged a conference call today with the media. The call was taken by NFLPA general counsel Richard Berthelsen; union president Kevin Mawae; George Atallah the assistant executive director of external affairs for the N.F.L. Players Association; and Indianapolis Colts center Jeff Saturday on the call to voice their displeasure.

On Batterman’s comments, Berthelsen said, “The NFL seems to be on a fault finding mission … The word lockout was never in the NFL’s vocabulary until Bob Batterman came on-board, and it has been a continuing theme.” Berthelsen later added, “Any suggestion we want a lockout is coming from outer space.”

The NFLPA has been keen to note that Batterman was the lead outside labor counsel for the NHL when that league locked out the players in one of the most protracted and damaging work stoppages in all of professional sports. The lockout ran for 310 days and resulted in the cancellation of the league’s 88th season.

No substantive meetings have been scheduled between management and the union, hence Batterman’s commentary. Berthelsen said that, “a week doesn’t go by” where NFLPA Exec. Director DeMaurice Smith and Commissioner Goodell don’t speak, but those “kind of communications are the most important so they are best kept confidential.” Berthelsen said that those type of conversations in private were the ones that accomplish the most meaningful results.

The NFL is looking for approx. $1 billion in additional expense credits – money that is taken off the top before the rest of the revenue pie is distributed to the players under a capped system. Commissioner Goodell has said that the owners’ cash flow has decreased by $200 million from 2006 to 2008, the year that the owners opted out of the current agreement, leading to the recent uncapped year. The players are seeking solid evidence back the assertion by Goodell.

“Give us the information that backs up your position, and that has never been forthcoming,” said Berthelsen.

The point being, the economic outlook for the league is far from abysmal. Revenues are growing, television deals with astronomical amounts associated to them continue to be reached, viewership is at an all-time high, and franchise values continue to increase.

It’s hardly the sign of a “distressed” industry.

Here’s more info, some of which shows that the gap between the amount owners are taking in compared to what the revenues are after taking their cut off the top is widening.

How much is the NFL claiming in losses?

The claim by the league is that player costs have outpaced revenue growth and owners’ cash flow declined by $200 million. There’s some problems with this. Unless costs skyrocketed, player costs in the capped system are tied to revenues. It’s possible that owners are having to put more into stadium development going forward due to the tightening credit market, and difficulties in having the public help foot large portions of the costs, but tying that aspect to the players seems like having a corporation that like McDonalds, asking those working the register to help pay for new franchises. The NFL has seen incredible revenue growth in the chilliest of economies. Asking players to take a cut has to be built on a bit more.

OK, how do the owners show that they’re on the losing end of the deal?

The league has been asked repeatedly to release financial information backing their claims. They have refused, which is, of course, a bit fishy. But, there are ways to make a case and still not give the players and media the keys to the store. Instead of using nothing but toothless rhetoric – calling numbers “voodoo economics”. On Tuesday, that got ramped up further when Greg Aiello, the NFL’s Senior Vice President of Public Relations, wrote on ESPN:

The NFL players’ union says, “The players haven’t asked for anything more and literally don’t want anything more. They have simply asked to play under the existing agreement.”

That ought to tell you something. If a collective bargaining agreement particularly favors one side, that side naturally won’t want to change anything. That’s how the players saw it in the ’70s and ’80s. The players believed the system favored the teams because there was no free agency. The players went on strike several times and then to court to change it.

One could argue that players asking the league for a reason to take a pay cut while numbers show growth in the league is nothing more than common sense.

The NFL wants to be seen as credible in this sphere, release something – anything – that backs their assertions. Saying, “trust us” doesn’t work when the stakes are this high.

You said there was a growing revenue gap. What did you mean?

In Monday’s article, I published the ALL and TOTAL revenue figures. ALL revenues are revenues that come into the league from its varying sources. TOTAL revenues shows what revenues are at after the owners take their cut off the top for expense credits.

As this graph and trendlne show, the gap between what the owners are taking in and the amount after the owners are taking a cut is widening.

What else is there about the graph?

You tell me… Does this look like a picture of an industry in decline? Revenues slightly leveled off just after the league reached the current CBA in 2006, but during the chilly economy, revenues have grown at an increased rate – 9% last year. This while the league saved hundreds of millions by not having to pay supplemental benefits to the players in the uncapped year, and there was a slowed spending trend on free agents, as opposed to spending more without the cap.

There’s more, right?

We could talk more on this, and let’s do. There is the cost of training facilities, payments on debt, in-stadium sponsorship deals, the escalation of ticket prices to watch practices, EBITA… much more.

As fans settle in for the stretch run of playoff games in the NFL, the most important date on their calendar shouldn’t be Super Bowl XLV on Feb 6, but less than a month after on March 3. That is when the current collective bargaining agreement in the NFL expires. Yes, fans could be looking at the league locking out the players in just over 7 weeks creating a work stoppage that, depending on how long it is, could possibly mean the cancellation of preseason games, at best and regular season games at worst.

The claim by the NFL is that if the players don’t reduce salaries and increase the amount they are providing in “expense credits” for expenditures such as stadium development, the league could see rocky times.

“Yes, NFL players deserve to be paid well,” said Commissioner Goodell in a January letter to fans. “Unfortunately, economic realities are forcing everyone to make tough choices and the NFL is no different.”

But, do the economic realities really point to the NFL needing to make “tough choices”? Here’s how it all breaks down.

As the saying goes, the devil is in the details. Such is the case in the on-going battle between NFL’s owners and players. On March 3, the current collective bargaining agreement between the players and the league expires, and to date, there is still considerable concern that a lockout by the owners is at hand.

Driven by a battle in the media as to just how much in revenues the players get each year through the current CBA, George Atallah, the NFLPA’s Assistant Executive Director for External Affairs sent a letter to the media. The point of the letter? Understand what is Total Revenues and what All Revenues are about. After all, the difference is about what the revenue split for the players are. The owners are seeking a 18 percent rollback on the percentage of revenues the players get.

What’s the difference between Total Revenues and All Revenues? As Atallah correctly defines it, “ ALL revenue refers to all the revenues generated by the NFL and its operations. “Total Revenue” is a CBA term that refers to all of the monies that are left after the owners receive an expense credit. Atallah claims that the owners have received credits in excess of $1 billion in each of the past two years.

So that players receive 50 percent of All Revenues – the revenues after the expense credit to the owners. Below are the percentage of Total Revenues the players get after the owners take their cut – all of which are below 60 percent. The NFLPA claims that the below numbers were jointly reached and audited by PriceWaterhouseCoopers:

Players’ Percentage of All Revenues since 2000:

2000-56.5%

2001-52.6%

2002-51.8%

2003-50.5%

2004-52.3%

2005-51.1%

2006-52.7%

2007-51.8%

2008-51.0%

2009-50.6%

Players’ Percentage of “Total Revenue” since 2000:

2000-61.7%

2001-57.1%

2002-56.1%

2003-54.3%

2004-57.0%

2005-55.1%

2006-58.4%

2007-58.0%

2008-57.7%

2009–57.1%

The following is ARTICLE XXIV GUARANTEED LEAGUE-WIDE SALARY, SALARY CAP, & MINIMUM TEAM SALARY from the 2006 CBA (PDF)

In the NFL, there may be no other sport within the sport like Cowboys watching. They illicit a love-hate relationship that is unrivaled in the league.

That atmosphere has ramped up with the injury to starting QB Tony Romo, their abysmal record of 1-7 which has them now sitting at in dead last in the NFC East, and the firing of head coach Wade Phillips. When you throw in the $1.15 billion cost of the new Cowboy Stadium, it all adds up to an interesting cocktail for owner Jerry Jones.

Recently, there was a very good article by Jason Cole of Yahoo! Sports saying that all this plays into Jones backing down from his hawkish position on a possible lockout in the NFL. Jones, along with Patriots owner Robert Kraft have been portrayed as the high-profile owners behind the push for “givebacks” from the players.

But, upon further review, you could make a case that the Cowboys’ woes actual work to solidify Jones’ hawkish stance.

Here’s why.

The logic goes that due to the train wreck of a season that the Cowboys are in the midst of, Jones will back off the lockout talk as he needs precious revenues from ticket sales that will be lost next season due to the Cowboys poor showing. But, in the second season of the new Cowboys Stadium, loving referred to as Jerry’s World, the club sits in second in total home attendance behind only the Redskins. It terms of filling the venue, the Cowboys rank #1 at 108.9 percent of capacity, averaging 87,138 per game. This during a 1-7 showing. Interest has been so high that while theywere unable to sell all seats as season tickets this season, the lion’s share were. And while there are some that may be turned off by this season fans would like to forget, when any tickets have hit the secondary market, demand has remained high, thus pointing to the capacity figures.

So, while there is a concern that the season’s woes in the standings could impact ticket sales next year, making Jones step back from his push for concessions from the players, there doesn’t seem to be a “the house is on fire” situation that would make Jones pull a 180. If this is how “bad” it is for the bottom line in a 1-7 season, chances are the allure and brand power of the Cowboys can withstand the hangover into next season. Ask Daniel Snyder and the Redskins about how a poor showing in the standings impacts his club’s bottom line.

And, if you think about it, there’s ample ammo to say that Jones sticks to his guns. That ammo, according to a report by Daniel Kaplan of the SportsBusiness Journal, is a $900 million war chest that the NFL’s owners have saved up for in case of a lockout.

But that too is only part of the owners’ money supply if a lockout were to occur.

In the event that a lockout were to run into the televised schedule for the NFL next season, the league still gets the rights fees from the likes of DirecTV, CBS, NBC, ESPN, and FOX. There’s been much said that even though the league wouldcontinue to get the TV revenues, if games are not played, they have to rebate the networks for those non-played games once the labor situation was resolved, or possibly replacement players are used. But, that’s only partially true. The $700 million that DirecTV pays annually stays with the league, regardless of no games played. The logic being that having the NFL on DTV’s channel listing, by itself, helps sell subscriptions for the satcaster.

So, when adding in the $700 million, you really get a $1.6 billion incentive package for the owners to lockout the players. When you throw in no player costs, both in terms of salaries and benefits, plusthe fact that non-game event revenues at stadiums will still be collected, it’s more than possible that Jones, while highly concerned about the sting of this horrendous season for the Cowboys, is thinking about the net gains a reduction of player salaries has in the long-term than how this season is playing out now.

It’s not yet 4th and goal with under a minute to play. Coming up on Week 3 of the 2010 NFL season the metaphor might be more closely aligned with the game getting ready to enter the 4th quarter. Still, the sides in the game are fighting for every inch.

The players in this game are fighting a labor battle that will determine whether there is the first work stoppage in the NFL since 1987 when the players went on strike over free agency. Twenty-one years later, Roger Goodell and the owners are set in their goal line stance across from DeMaurice Smith and the players, this time with the owners looking for concessions from the players that if not reached would result in a lockout in just over 6 months on March 3 when the current collective bargaining agreement expires.

The owners, feeling that a chummy relationship between the late Gene Upshaw and Paul Tagliabue, who was preparing to retire after being commissioner of the league for 17 years, brought a “bad deal” for the owners in the 2006 CBA extension with the players getting 59.6 percent cut of the revenue pie. Now, hawks within the ownership ranks are calling for a “giveback” from the players. Owners such as Jerry Jones and Robert Kraft have called on concessions such as the players accepting more financial responsibility for new stadiums being built, which the owners say will generate more revenues that will trickle down to the players. In almost Cold War terms, Panthers owner Jerry Richardson issued the rally cry to his fellow owners that it was time to “take back our league”.

Part of the aggressive stance by the owners stems from the billions of dollars that come in from national television deals, even if there are no games played due to a lockout. While Commissioner Goodell has been keen to say that league will have to pay the networks back, with interest, if there is a lockout, he has avoided mentioning that $700 million from DirecTV for the exclusive rights to the NFL Sunday Ticket package, does not have to be paid back. The league negotiated the foolproof deal with DTV by saying that merely having the NFL on their network selection would bring in subscribers, and therefore paying back the annual rights fees in the event of a lockout or strike was unwarranted.

The players, knowing that the owners have a sizeable war chest that could outlast them, have embarked on several procedural moves to try and thwart the lockout. For starters, the NFLPA filed a legal complaint with the Special Master that has been assigned to deal with labor disputes with the league over how the contracts were designed with money still flowing to the owners in the event of a work stoppage. Owners have said that it’s common to negotiate such provisions, while the players have said that through the discovery process they have evidence that points to the owners negotiating the “pay without play” clauses to prepare themselves for the lockout.

While the owners have aligned themselves, so too have the players. At a conference call in June to cover the details of the complaint to the Special Master over the TV deals, NFLPA President Kevin Mawae said many of the players were “scared” about a potential lockout.

That has since changed. According to Mawae, the players are unified in fighting for nothing more than what they already have. “The players are confident that they’re being led in the right direction by the union and DeMaurice Smith and are well informed about the position that management has been taking,” said Mawae. “A few weeks ago when Roger Goodell was making the rounds to all the training camps, I think he found out that the players are a little more informed on the issues than he thought they were. They called him to task.”

Having Brett Favre on your home team may cause you heartburn, what with all the retiring/unretiring talk, but when he does finally settle in and say, “I’m coming back” fans gobble up tickets at an incredible rate.

With Favre now returning to the Minnesota Vikings after his ankle surgery, ticket sales on the secondary resale market have (once again) skyrocketed, up an average of $50 per ticket for home games at the Metrodome, according to ticket search engine company, FanSnap.

Leading the way for home games are tickets for Favre’s former team, the Green Bay Packers which are averaging an asking price of $230. But, that’s nothing compared to away games. When Favre and the Vikings visit the Super Bowl Champion New Orleans Saints, tickets are running for an asking average price on the secondary market at $587.

Here’s how ticket sales have ebbed and flowed depending on whether Favre was retiring or not this off-season for the Vikings